Strategic Finance for SMSF Investments

Investing in property through your SMSF can provide:

• Tax advantages – Rental income from an SMSF-owned property is taxed at a concessional rate of 15%, and if held until retirement, capital gains tax (CGT) can be eliminated.
• Long-term wealth growth – Property investment allows your super fund to build equity over time while generating passive income.
• Asset protection – Your SMSF assets are separate from personal assets, adding an extra layer of financial security.

With the right structure, SMSF property lending can be a game-changing strategy—when done correctly. It’s crucial to have the right advisory team behind you to avoid costly mistakes.

Your SMSF can invest in both residential and commercial property, but there are strict rules:

• Residential property – Cannot be lived in or rented by a fund member or related party such as family members.
• Commercial property – Can be leased to a related party, including your own business, at market rates. Generally via a company or trust structure.

In addition to this, there are value caps within your SMSF and you are not allowed to borrow for property renovations or developments (any intended change to the use of the property is restricted). Whether you’re purchasing an investment property or a commercial space for your business, we ensure your SMSF finance is structured to align with regulations and your long-term wealth goals in conjunction with your team of trusted advisers.

Lenders have varying SMSF loan requirements across residential and commercial property. Typically:

• Commercial LVRs range from 60-90%, depending on the asset type.
• Residential LVRs range from 60-80%.
• The SMSF must demonstrate strong cash flow to service the loan and maintain adequate liquidity and asset position post-acquisition.
• Additional costs such as stamp duty, legal fees, GST, and ongoing property expenses must be factored in.

We assess your SMSF’s financial position and match you with lenders offering the best borrowing capacity and terms for your investment strategy. We also collaborate with your accountants, legal team, and financial advisers to ensure alignment with your financial goals and compliance requirements.

Your SMSF can purchase commercial property, including premises for your own business—but there are strict regulations that must be followed. Under ATO rules, your SMSF can lease commercial property to a related party (such as your own business) as long as:

• The lease is at market rates and follows standard commercial terms.
• Rent is paid on time and in full, just like any other tenant.
• The property is used for genuine business purposes (not residential use).

This strategy allows business owners to pay rent to their own SMSF, effectively building their retirement savings while securing a stable commercial premises. This is very common for Medical, Dental and Veterinary Practitioners but can be applied to other industries too.

While SMSF lending can be a powerful tool for wealth creation, it comes with strict regulations and unique challenges that must be carefully managed:

• Strict borrowing rules – SMSFs cannot borrow for property renovations, development, or vacant land purchases.
• Higher costs – SMSF loans typically have higher interest rates and stricter lending criteria than standard home loans.
• Liquidity challenges – Property is an illiquid asset, so your SMSF must maintain sufficient cash reserves to cover loan repayments and ongoing expenses.
• Limited industry expertise – Fewer advisers specialise in SMSF lending, making it essential to have a team that understands the complexities and works in this space regularly.

At By Invite Finance, we collaborate closely with your accountant, financial planner, and legal team to ensure your SMSF lending structure is fully compliant and strategically aligned with your long-term goals. If you’re missing key advisers in your network, we can introduce you to specialists who have deep experience in SMSF investment strategies.